We may be entering changing times in the mortgage market as the prospect of rising interest rates became ever more likely today.
The Monetary Policy Committee September meeting (they determine the Bank of England’s interest rate) said that interest rates may rise “in the coming months”. This has been driven by a number of factors but most notably inflation has risen from 1.4% at the turn of the year to 2.9% in September with an expectation that this will rise above 3% in October. The Bank of England’s target is 2%.
The committee members voted 7 – 2 in favour of keeping interest rates at 0.25%, however this could indicate that a rate rise is now looking ever more likely.
This has been further evidenced by the pound rising against the dollar and the euro – all indications that markets are anticipating an interest rate increase in the near term.
So why is this important? As specialists in providing mortgage advice, we want all clients (old and new) to benefit from the best possible interest rate to keep their monthly payments as low as possible and also to protect against future rises.
According to research by Virgin Money (Virgin Money analysis based on stock residential mortgage data from the CACI mortgage market database 31 August 2016), around 32% of the population, 3 million people approximately, pay the lender’s Standard Variable Rate (SVR). This is their most expensive interest rate and means that many customers are missing out on the chance to save money or pay off their mortgage early.
The average SVR is 4.56% as per the Virgin Money research above, which is significantly above the best fixed and tracker rates available currently in the market place. If interest rates rise, these SVR rates will rise even further.
When did you last review your mortgage? Now is most definitely the time and if you leave it too much longer you will almost certainly miss out!!
Paul Hardingham and Tony Ibson are Mortgage and Protection Advisers at Innovate Mortgages and Loans. Both have over 20 years of experience advising individuals and businesses across the North East of England. They can be contacted for bespoke advice at firstname.lastname@example.org or email@example.com or call 0191 223 3514.
Think carefully before securing other debts against your home.
Your home or property is at risk of repossession if you do not keep up repayments on a mortgage or other loan secured on it.
Innovate Mortgages and Loans is a trading style of Innovation Financial Management Ltd.